Chinese firms in line to buy US automaker

Updated: 2013-02-20 12:13

By Li Fangfang in Beijing and Michael Barris in New York (China Daily)

Struggling US automaker Fisker Automotive, which makes electric vehicles, is weighing bids for a majority stake in the company from two Chinese firms.

The move comes after the company's founder and chairman Henrik Fisker said in December it was seeking potential strategic partners.

The Anaheim-based hybrid-vehicle maker is looking at bids from Zhejiang Geely Holding Group Co Ltd and Dongfeng Motor Group Co, with Geely appearing to be the preferred suitor, Reuters reported on Tuesday, citing two sources familiar with the deal.

The sources said Geely has sent a team of engineers to Fisker's headquarters in California to evaluate the company and its technology to make battery-powered electric cars with a small gasoline engine used to extend the car's driving range.

The sources added that both offers, which Fisker received in the past three weeks, were worth between $200 million and $300 million, which would give the suitors a majority stake in the automaker, Reuters said.

Dongfeng could not be reached on Tuesday, while Yang Xueliang, a spokesman for Geely, declined to comment on the report. However, Yang said that Geely - whose Hong Kong-listed subsidiary has just signed a 1 billion yuan ($158.94 million) deal for a 50-50 joint venture with Kandi Vehicles to make low-speed electric vehicles - will announce the group's new-energy vehicle plan in about a month.

Fisker would only confirm in a statement on Tuesday that it had received "detailed proposals from multiple parties in different continents, which are now being evaluated by the company and its advisers". It said it is "pleased with the level of interest from potential partners".

Fisker had a difficult year in 2012, as it suffered from a series of recalls due to battery, software and cooling issues.

"The new-energy vehicle industry in the US is entering a period of uncertainty as the government will probably block more aid to finance the sector," said Zhong Shi, a Beijing-based expert in the new-energy vehicle sector, who is familiar with Fisker. "That will make investors in the sector, mostly venture capital firms, retreat from those troubled automotive players as soon as possible.

"Chinese companies' strong interest in Fisker is a result of the Chinese government's encouragement to develop alternative-fuel vehicles in a bid to ease the country's strong reliance on imported oil and reduce emissions.

"The purchase or control of mature new-energy companies in the United States can provide ambitious Chinese companies with a shortcut in the sector."

According to Reuters' report, Fisker's leaders and their advisers believe that Geely is "more serious" and "passionate" about the company and its technology.

Also in Geely's favor is the fact that the company acquired Swedish luxury car brand Volvo in 2010 and that it probably can move faster in its decision-making process than State-owned Dongfeng.

However, Zhong said that he believed that the Wanxiang Group, which bought Fisker's bankrupt primary battery supplier A123 Systems last year, could also be a suitor for Fisker.

"A Wanxiang executive previously indicated its intent to help support Fisker, which it sees as its most important customer," he said. "If Wanxiang were to win the deal, it would stand in the frontline of the extended electric-vehicle sector in China, with complete control of core technologies for both battery and vehicles."

As European and Japanese automakers are not familiar with or interested in extended plug-in hybrid technologies, Chinese bidders have more chances to win the Fisker deal, Zhong added.

Fisker spokesman Roger Ormisher told China Daily that the company is optimistic about the Chinese electric-vehicle market, a region it has been preparing to enter for two years.

"We're aware of the potential and working toward bringing the car to market," he said.

Issues such as the relatively high cost of electric vehicles and worries about running out of power on long trips owing to a lack of charging stations are seen as tough challenges facing electric-vehicle makers generally.

Ormisher said Fisker's plan is to market its Karma car, which sells for $110,000 in the US to upscale Chinese buyers who typically own four to five cars.